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(Oregonian (Portland, OR) Via Acquire Media NewsEdge) April 19--Nike is backing away from developing its FuelBand, plans to lay off 55 employees working on the product and will focus instead on developing fitness software, tech website CNET reported Friday in an exclusive story.

The move comes just two years after the FuelBand was introduced at a major event in New York City. Nike was seen as angling for a share of the digital fitness products market believed to account for $330 million annually, according to the NPD Group.

"As a fast-paced, global business we continually align resources with business priorities," Nike spokesman Brian Strong said in an email. "As our Digital Sport priorities evolve, we expect to make changes within the team, and there will be a small number of layoffs. We do not comment on individual employment matters."
The company informed members of the 70-person hardware team -- part of its larger, technology-focused Digital Sport division comprised of about 200 people -- of the job cuts Thursday. About 30 employees reside at Nike's Hong Kong offices, with the remainder of the team at Nike's Beaverton, Ore., headquarters.

Nike's Digital Sport hardware team focused on areas like industrial design; manufacturing operations; electrical and mechanical hardware engineering; and software interface design. Products included not only the FuelBand but also the Nike+ sportwatch and other, more peripheral sport-specific initiatives.

Of those 70 employees, about 70 percent to 80 percent -- or as many as 55 people -- were let go, the person said, asking not to be identified because the information was confidential. Some of the employees will be staying on at Nike through May. It's unclear how many current employees, if any, have been internally recruited to join other Nike divisions. Nike Digital Tech, responsible for Web software, was not affected.

The CNET story says Nike has canceled plans for a further FuelBand versions. However, Strong told the tech website the company will not stop selling its second-generation FuelBand SE.

"The Nike+ FuelBand SE remains an important part of our business. We will continue to improve the Nike+ FuelBand App, launch new METALUXE colors, and we will sell and support the Nike+ FuelBand SE for the foreseeable future," Strong said in the email to CNET.

CNET also reported earlier this week than Nike was considering shuttering its FuelBand operations.

Last week, Nike unveiled its Nike+ Fuel Lab in San Francisco, a development announced last October. At the time, the company said it would keep its Digital Sport Team at its World Headquarters campus near Beaverton and that Nike employees working at the San Francisco Fuel Lab would be Oregon-based.